A Guide for Beginners to Trade in Crypto

Majority of the new investors entering into the crypto market plan to go with buy and hold strategy. Sounds fantastic right? Not really though. Assuming to buy some coins and waiting for them to go up, may lead you to loss.

Reason: You are not making good use of the crypto trading tools and making a buy at the wrong time. If you are new to the crypto world, this may sweep you under the rug and harm your trading morale.

Solution: By using simple yet near accurate analysis with the help of indicators, you can time your buying and gain more profit than loss.

Prior to little or no experience may lead you to a bad investment and could sabotage your chances of gaining profits. Here in this blog, you will get to know about one of the most popular indicators which is widely appreciated and used by the traders.

Relative Strength Index aka RSI

This is a momentum oscillator which is used to measure the speed as well as the change in price of the digital assets. This is one of the widely used indicators by the traders to find out the change in momentum of the price in market.

There are a number of cryptocurrency indicators in the market and this one gives you a keen insight into overbought and oversold stock. It is capable of doing much more than giving you the information about the the change in price. This tool has the ability to generate trading signals which are diverse in nature.

Another reason why it widely adored in the crypto community is, it is sort of all-in-one oscillator. Thus, relieves you from using three different oscillators to get an idea about the strength of a market trend.

How to use it:

1. By Looking at the divergences: Out of number crypto trading tools, it facilitates you to identify tops/bottoms and trend reversals. A divergence occurs when the highs/lows presented by the RSI are different than the highs/lows coming from the market price. This is the extremely productive use of the Relative Strength Index indicator.

2. By fine-tuning Entries and Exits: It is wise to put your exact Entry and Exit on a comparatively smaller time frame. Let’s say for an instance you set it to 15M or 30M. Doing that will help you to enter and exit when overbought and oversold crosses lower time frames.
   Understanding Signals

The indicator provides you overbought when the line in RSI touches or crosses the 70. Oversold signals come into existence when it crosses 30 or below 30. Besides 70/30, you can also use 80/20 or 85/15. Doing that will provide you to have more powerful and effective signals. However, it is quite rare to happen in the market for such signals to occur.

The other signal that RSI provides you is the “Bearish Divergence”. Such a signal comes into existence when the divergence goes all the way in the opposite direction of the price. In a case such as this, RSI moved down as the price of the digital asset moves up. It gives you a very strong indication to sell your stock.

RSI is one of the most powerful cryptocurrency indicators ever came into existence. Tested by both time and efficiency, traders adore this tool and trade their stocks based on the readings given by it. Once you perfected this tool, you sure will become a pro trader.